DFCC net profit up 43% to Rs. 2.5 b

Wednesday, 2 November 2016 00:47 - - {{hitsCtrl.values.hits}}

DFCC yesterday reported a Rs. 2.5 billion profit after tax for the nine months ended on 30 September, up 43% from a year earlier. At the Group level it was up 32% to Rs. 2.69 billion.

“The synergies of the amalgamation with Vardhana Bank are starting to materialise,” DFCC said in a statement.

DFCC’s core banking business was the main driver with net interest income up 17% to Rs. 6.23 billion. This was complemented by a net fee and commission income, which grew by 14% to Rs. 951 million. Reflecting a controlled approach, the total assets of the Group grew by 12% for the nine months and stood at Rs. 277.5 billion as at 30 September 2016 compared to Rs. 247.1 billion as at 31 December 2015.

The total assets of the Group recorded a year-on-year growth of 17% compared to Rs. 236.5 billion as at 30 September 2015.

In terms of prudential indicators, DFCC is one of the best capitalised banks in the industry. As at 30 September 2016, the Group Tier 1 capital adequacy ratio was 14.0% and the total capital adequacy ratio was 13.6% before considering the current year to date profit. These ratios stand well above the regulatory stipulated levels.

DFCC said close monitoring and follow up have enabled an improvement in portfolio quality as borne out by the decline in the gross non-performing loan and advance ratio to 3.9% from 4.4% during the third quarter.

“This is creditable considering the substantial exposure of the bank’s credit portfolio to higher risk project finance and term lending,” the bank said.

Accompanying this improvement was the decrease in the impairment allowance to Rs. 910 million from Rs. 953 million as a result of improved recoveries. Meanwhile, on the cost side, the synergies from the amalgamated banks along with stringent cost control and efficiency measures resulted in a reduction of operating expenses by 7% to Rs. 3.29 billion.